Cutting the cable TV cord

Heather Bennett of Halifax is one of many Nova Scotians who have jettisoned their link to cable television and replaced it with streaming services like Netflix. (ERIK WYNNE / Staff)

Heather Bennett had a long to-do list when she moved into her apartment two years ago.

Unpacking boxes, getting the power turned on and setting up Internet were just a few items she checked off her list.

But the 26-year-old never considered hooking up cable television.

“My roommate and I just never wanted cable,” Bennett said in an interview from her Halifax apartment. “I don’t really like cable because you have to sit down at a scheduled time to watch a show or worry about recording it and it’s just not something that works for me.”

She’s part of a growing number of so-called “cord-nevers”: typically younger consumers who have never paid for traditional cable TV.

But the lack of a cable subscription or satellite programming doesn’t mean these 20-some- things are going without popular TV series like The Walking Dead.

Television shows and movies can be watched using on-demand Internet streaming websites like Netflix, purchased from Apple iTunes and watched directly on broadcasters’ websites like CTV.

“Netflix has a lot of great features,” Bennett said. “I have a tendency to start something and come back later and it remembers where I was. And my roommate is a TV binger and he can watch entire seasons back to back.”

The increasing popularity of online streaming services is causing a shakeup in the cable industry.

Although the number of people who have never paid for cable may be small, a more troubling trend for large media companies is what’s known in industry parlance as “cord-cutters.”

These once loyal TV subscribers are cancelling their cable and watching TV and movies online. And those who invest in a good pair of bunny ears can still watch broadcast TV for free.

A recent survey by technology research firm Media Technology Monitor found that one in seven Canadians are somewhat or very likely to cancel cable in favour of free or cheaper alternatives.

Roughly 16 per cent of poll respondents said they were seriously considering cutting the cord.

Then there are the “cord-shavers.”

These are consumers who keep basic cable but cut back on extras like theme packages. Instead they opt for what is referred to as over-the-top subscription services like Netflix.

“People have gotten really tired of paying a lot of money every month for a service that is very limited,” said Matt Corkum, a Halifax technology blogger who teaches media arts at Nova Scotia Community College.

Major cable companies are pushing hard to get more content available to subscribers on demand and on the go.

For example, Eastlink To Go, Rogers Live TV and Bell TV Online make some content available to subscribers on computers, tablets and smartphones.

David Purdy, senior vice-president of content with Rogers, said the company is focused on making its entertainment available across more devices and on demand, allowing customers to place-shift and time-shift.

“The proliferation of multi-platform viewing is a great opportunity to add more value for our customers,” he said. “The challenge is, over time, if we don’t evolve what we offer and don’t change the definition of what we sell, we will have challenges.”

Rogers is expected to launch an online streaming service in the coming months that would compete with Netflix.

Purdy would only say that Rogers is “fighting hard to roll out new products in the very near future” to ensure that customers don’t leave the Rogers “ecosystem” to get the entertainment they want.

But Corkum said telecom companies aren’t changing fast enough.

“The online services they offer are limited and require a subscription to regular cable, usually with a theme package that costs even more,” he said. “It’s no surprise that the number of subscribers to traditional cable packages is declining.”

Part of the challenge for telecoms, however, seems to be negotiating licensing deals with the big cable television studios and premium networks.

“We’ve had to push the studios for 21-day catch-up rights and now we’re having to push for full-season stacking rights,” Purdy said.

But as cable companies scramble to beef up their services to rival competitors like Netflix, more and more Canadians are considering cutting the cord.

The Convergence Consulting Group estimates roughly 400,000 Canadian TV subscribers out of 11.8 million have cut the cord since 2011, about 3.5 per cent of the market.

Mauricio Neira cut his cable subscription three years ago.

“I found cable too restrictive,” the 33-year-old said. “It’s pre-programmed, and if you want to watch a show, you have to set your DVR to record it.”

Neira now subscribes to Netflix and Hulu, an American subscription service offering ad-supported on-demand streaming video.

“It’s just a lot more cost-effective,” he said. “If you have high-speed Internet, then why pay for cable.”

Although household penetration of pay television is expected to fall off as more consumers sign up for online services, Bell Aliant doesn’t see Netflix as a threat.

Mark MacMurtry, Bell Aliant’s team lead for product strategy and development, said the cable company hasn’t seen a drop in subscriptions.

“Netflix is over 30 per cent penetration now in Canada and we logically think if people are getting all this content from the Internet they must be dropping their traditional TV service, but they aren’t,” MacMurtry said.

Instead, consumers tend to be using Netflix like a theme pack, augmenting their traditional cable subscription, he said.

“We really view those services as complements to our service, not as threats,” MacMurtry said.

Also, as Netflix and other services push to deliver streaming video in HD and even 4K resolution, a higher image quality, Bell Aliant is banking on consumers needing more bandwidth.

“We’ve built our fibre optic network so that we deliver the fastest Internet in Atlantic Canada,” he said. “We’re there to deliver all the bandwidth a customer needs to stream those services.”

Higher streaming quality could sway sports fans — some of the biggest holdouts for traditional cable — to consider watching games online.

Major league sports clubs are starting to offer online packages to stream live out-of-market games and replays in HD.

“The stalwarts are the people who wanted live sports coverage but even that is changing,” Corkum said.

“Now you can buy NHL packages online for the same price you would through your cable company, but you don’t have to pay them every month on top of it. It’s cheaper to cut cable and buy the specific package you want.”